Inflation Slows to 8.5% as Gas Prices Fall in July

Annual inflation in the United States slowed slightly as falling gas and energy prices in July provided Americans some relief. Still, higher food and shelter costs kept consumer prices near a four decades high, according to U.S. government data released Wednesday, Aug. 10.

While gasoline prices dropped nearly 8% last month, they are stubbornly high compared to a year ago, as are pricing hikes for food which ran the quickest since 1979.

In the headline monthly figure, U.S. consumer prices were unchanged in July after advancing 1.3% in June, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what Americans pay for everyday items ranging from clothing to cars.

Marking their seventh straight monthly increase of 0.9% or more, food prices rose 1.1% with groceries 1.3% higher and dining out costs up 0.7%.

Food inflation soared 10.9% year-on-year, the fastest rate since May 1979. Prices soared 13.1% for groceries, the most since March 1979, and they jumped 7.6% for foods consumed outside of the home.

 

Prices at the pump declined 7.7% in July after advancing 11.2% in June. They rose 44% from a year earlier, slowing from the 59.9% increase reported previously — gasoline’s quickest inflation pace since March 1980.

The broader index for energy, which combines items like gasoline, electricity, and fuel oil, fell 4.6% in July after increasing 7.5% in June. Energy prices rose 32.9% from a year ago.

Excluding the more volatile food and energy components, the rate of core consumer prices in July slowed to 0.3% from 0.7%.

"The indexes for shelter, medical care, motor vehicle insurance, household furnishings and operations, new vehicles, and recreation were among those that increased over the month," the Labor Department’s report stated. "There were some indexes that declined in July, including those for airline fares, used cars and trucks, communication, and apparel."

Shelter or housing prices rose 0.5% for the month following two consecutive increases at 0.6%, which registered as the biggest gains since March 2004. They advanced 5.7% from a year earlier for their biggest 12-month increase since February 1991.

“While the July CPI report is encouraging, inflation pressures remain strong especially in the core services sector, with still buoyant increases in residential rent prices,” Reuters quoted Kathy Bostjancic, chief U.S. economist at Oxford Economics.

Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. This index accounts for about one-third of the entire CPI.

Airline fares dropped 7.8% last month after falling 1.8% in June. Previously, they posted gains of 12.6% in May and 18.6% in April, which was the largest 1-month increase since the inception of the series in 1963. They are 27.7% higher year-over-year.

Clothing prices dipped 0.1% after increasing 0.8%, and they advanced 5.1% from a year earlier.

New vehicle prices rose 0.6%, for their fifteenth increase in sixteen months, after rising 0.7% previously. They increased 10.4% from a year ago.

Used car and truck prices slipped 0.4% following a 1.6% increase and are 6.6% higher than a year ago.

In the headline annual figure, inflation rose 8.5% over the past 12 months after soaring 9.1% previously to register the highest rate of inflation since November 1981. Annual inflation rates have now topped 6% for ten straight months and have been at or above 7% for eight months in a row.

Meanwhile, and for a second consecutive time, core inflation picked up 5.9% over the past year. Of note, in the period ending March, the core rate at 6.5% was the highest since August 1982. The core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it guides the central bank when setting its key interest rate.

The following table of key inflation figures is for the last seven months through June, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on Aug. 10, 2022. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

January 2022 to July 2022 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted)

  Jan. 2022 Feb. 2022 March 2022 April 2022 May 2022 June 2022 July 2022 12 Month
All items 0.6 0.8 1.2 0.3 1.0 1.3 .0 8.5
  Food 0.9 1.0 1.0 0.9 1.2 1.0 1.1 10.9
    Food at home 1.0 1.4 1.5 1.0 1.4 1.0 1.3 13.1
    Food away from home 0.7 0.4 0.3 0.6 0.7 0.9 0.7 7.6
  Energy 0.9 3.5 11.0 -2.7 3.9 7.5 -4.6 32.9
    Energy commodities -0.6 6.7 18.1 -5.4 4.5 10.4 -7.6 44.9
      Gasoline (all types) -0.8 6.6 18.3 -6.1 4.1 11.2 -7.7 44.0
      Fuel oil 9.5 7.7 22.3 2.7 16.9 -1.2 -11.0 75.6
    Energy services 2.9 -0.4 1.8 1.3 3.0 3.5 0.1 18.8
      Electricity 4.2 -1.1 2.2 0.7 1.3 1.7 1.6 15.2
      Utility (piped) gas service -0.5 1.5 0.6 3.1 8.0 8.2 -3.6 30.5
  All items less food, energy 0.6 0.5 0.3 0.6 0.6 0.7 0.3 5.9
    Commodities less food, energy 1.0 0.4 -0.4 0.2 0.7 0.8 0.2 7.0
      New vehicles .0 0.3 0.2 1.1 1.0 0.7 0.6 10.4
      Used cars and trucks 1.5 -0.2 -3.8 -0.4 1.8 1.6 -0.4 6.6
      Apparel 1.1 0.7 0.6 -0.8 0.7 0.8 -0.1 5.1
      Medical care 0.9 0.3 0.2 0.1 0.3 0.4 0.6 3.7
    Services less energy 0.4 0.5 0.6 0.7 0.6 0.7 0.4 5.5
      Shelter 0.3 0.5 0.5 0.5 0.6 0.6 0.5 5.7
      Transportation 1.0 1.4 2.0 3.1 1.3 2.1 -0.5 9.2
      Medical care 0.6 0.1 0.6 0.5 0.4 0.7 0.4 5.1

 

The BLS releases inflation data around the middle of a month for consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for August and the latest annual period become public on Sept. 13, 2022.

CPI data is used in calculating inflation rates and in this site’s U.S. Inflation Calculator. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.

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